In October 2008, the month after Lehman failed and the Great Recession started, industrial bellwether Caterpillar underwent a series of 19 consecutive, record, declines in Global dealer retail sales declines, finally emerging from its unprecedented funk in May of 2010, just in time to celebrate the start of financial and economic Greece's collapse which ended with a sovereign default. Well, as of July 2014, that record is no longer valid, because starting with a -1% drop in Global retail sales in December 2012, CAT has now posted a new record of 20 consecutive global delaer retail sales declines, after a -9% Y/Y print for the month of July.
Good thing the Federal Reserve isn`t worried about inflation, another 2% rise is just noise. But when the Fed does start worrying about inflation, not only is it too late, it is 1970s too late!
While the markets are currently suggesting that the "dip" is over, there are several immediately prevailing risks that could catch unwitting investors.
Is there something particularly notable about a 17x trailing PE multiple on the S&P 500? According to Deustche's David Bianco, there is especially during mid to late cycle expansions, i.e., after three (or much more in this case with the S&P 500 now repoting 5+ years of EPS growth) years of rising earnings. In fact, as DB calculates, the only two periods of a PE over 17 after 3 years from the last EPS decline are 1965-66 and 1996-98 (Figure 2) below. And right now. It should be self-explanatory that both of those historic periods ended with a sharp equity correction.
The current 'boom'in energy production, the hangover from the housing bubble, and the long-term decline in manufacturing employment are combining to shift the employment profile of the US economy. But as Deloitte Unioversity press notes, the national story of slow recovery obscures the more complicated regional picture: As is the case during most business cycles, the pace of recovery has been very uneven among the states. At present, only 16 states plus the District of Columbia have employment rates at least one percent higher than they were prior to the start of the recession. Overall, as the following chart shows, Americans have been struggling to find work, but some states and industries have had an easier time than others.
Why can't, or rather won't, the Fed let the bubble market collapse once again? Simple - as the following chart shows, the illusion of wealth is now most critical when preserving the myth of the welfare state: some 50% of all US pension fund assets are invested in stocks and only 20% in Treasurys.
"Anti-Putin" Alliance Fraying: Germany, Slovakia, Greece, Czech Republic Urge End To Russian SanctionsSubmitted by Tyler Durden on 08/16/2014 11:04 -0400
Greece, Slovakia, Czech Republic, Germany... the chorus of voices demanding an end to Russian sanctions is starting to drown out the neocon warmongering efforts of the west...
There is a standard view of energy and the economy that can briefly be summarized as follows: Economic growth can continue forever; we will learn to use less energy supplies; energy prices will rise; and the world will adapt. The following view of how energy and the economy fit together is very different - it is based on the principle of reaching limits in a finite world.
“It’s a Little Misleading to JUST Call This a Depression. It’s WORSE Than That”
This weekend’s “Things To Ponder” is comprised of a variety of readings that cover a fairly broad spectrum from educational to informative and even a little bit sarcastic.
Canada Releases Atrocious Jobs Data; Then Revises It Above The Highest Estimate Following Public OutcrySubmitted by Tyler Durden on 08/15/2014 09:08 -0400
This morning it was take two for the Canada jobs print, which was as follows: In July, Canada employment increased 41.7K in July according to Statistics Canada, from -9.4K in prior month. This was about 41K higher than the previous "erroneous" print, and double the original estimate: high enough to make everyone happy. In fact, it was so high, it surpassed the highest range of the forecast, which topped out at 41.4K based on 20 economists.
The record-breaking outflows in high-yield bonds are not the only indication that the U.S. economy could be on the verge of very hard times. Retail sales are extremely disappointing, mortgage applications are at a 14 year low and growing geopolitical storms around the world have investors spooked. For a long time now, we have been enjoying a period of relative economic stability even though our underlying economic fundamentals continue to get even worse. Unfortunately, there are now a bunch of signs that this period of relative stability is about to end. The following are 14 reasons why the U.S. economy's bubble of false prosperity may be about to burst...
The first half of this week has been very interesting from an economic, financial and geopolitical viewpoint. Despite what appears to be globally increasing risks, the financial markets have seemed relatively unfazed. Historically, such calm has always existed prior to the eventual storm. This week’s “3 Things” takes a look at some of the “rising risks” that we believe are being ignored which could potentially be harmful to individual's portfolios.
Putin Says The Petrodollar Must Die, "The Dollar Monopoly In Energy Trade Is Damaging Russia's Economy"Submitted by Tyler Durden on 08/14/2014 11:15 -0400
PUTIN SAYS RUSSIA SHOULD AIM TO SELL OIL AND GAS FOR ROUBLES GLOBALLY, AS DOLLAR MONOPOLY IN ENERGY TRADE IS DAMAGING ECONOMY
This is especially the case in Ukraine where the currency has lost more than half of its value versus gold (see chart above and below). Gold in Ukraine Hrvynia is up 70% since the start of 2014. People who own gold in Ukraine would laugh at you, if you said that gold is not a safe haven. As would people in many countries in South America, the Middle East and Africa.